A sharp retreat in oil prices, a report of higher-than-expected US consumer confidence and signs of fresh consolidation in the telecoms sector helped European shares snap a two-session losing streak yesterday.

Royal Dutch/Shell accounted for a huge chunk of European gains, up 3.5 per cent despite a dip in oil prices to below $60 a barrel as its shareholders approved the Anglo-Dutch major oil company's plans to unify its dual-ownership structure.

The corporate unification is expected to help streamline Shell's management structure, whose complexity was blamed for a damaging oil reserves overbooking scandal last year. Energy rivals BP and Total gained 1.9 per cent and 1.2 per cent, respectively, as the sector got an extra fillip from an industry upgrade from Morgan Stanley.

By 1545 GMT, the FTSEuro first 300 index was 0.86 per cent stronger to end unofficially at 1,140.58 points - still one per cent below last Thursday's three-year peak of 1,151.74. The narrower DJ Euro Stoxx 50 index put on 0.94 per cent to 3,162 points.

The telecoms sector was another strong spot as Dutch operator KPN agreed to buy mobile phone firm Telfort for up to €1.12 billion, pushing its shares 3.4 per cent higher on expectations it would significantly raise its market share.

A US report showing that consumer confidence, which had already improved in May, had risen further in June to a three-year high helped soothed investors wary that soaring oil prices might hamper consumer spending and erode corporate profits.

"What we're seeing is the continuation of healthy economic activity in the United States, and this means the Federal Reserve will continue raising its rates until four per cent," said Yves Maillot, head of equity investment at Robeco Gestions.